Correlation Between Algonquin Power and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and MCAN Mortgage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Algonquin Power and MCAN Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and MCAN Mortgage, you can compare the effects of market volatilities on Algonquin Power and MCAN Mortgage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Algonquin Power with a short position of MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and MCAN Mortgage.
Diversification Opportunities for Algonquin Power and MCAN Mortgage
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algonquin and MCAN is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage and Algonquin Power is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Algonquin Power Utilities are associated (or correlated) with MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Algonquin Power i.e., Algonquin Power and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Algonquin Power and MCAN Mortgage
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to under-perform the MCAN Mortgage. In addition to that, Algonquin Power is 1.81 times more volatile than MCAN Mortgage. It trades about -0.02 of its total potential returns per unit of risk. MCAN Mortgage is currently generating about 0.14 per unit of volatility. If you would invest 1,428 in MCAN Mortgage on September 2, 2024 and sell it today you would earn a total of 541.00 from holding MCAN Mortgage or generate 37.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. MCAN Mortgage
Performance |
| Timeline |
| Algonquin Power Utilities |
| MCAN Mortgage |
Algonquin Power and MCAN Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and MCAN Mortgage
The main advantage of trading using opposite Algonquin Power and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, MCAN Mortgage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MCAN Mortgage will offset losses from the drop in MCAN Mortgage's long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| MCAN Mortgage vs. Timbercreek Financial Corp | MCAN Mortgage vs. Atrium Mortgage Investment | MCAN Mortgage vs. Firm Capital Mortgage | MCAN Mortgage vs. First National Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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